When people think of property investment, often they think of buying residential property and getting it rented out. What most don’t know is that investing in commercial properties can have far greater advantages and investment returns than residential properties.
A common misconception about commercial properties is that they are investments only wealthy people can afford to make. But that’s not true at all. Experienced real estate investors know that there’s much more potential for bigger income in commercial properties than in residential properties.
Below are the advantages of commercial property investing:
Higher Income Yield:
The average yield of commercial properties can be 5-12%, while residential properties yield only 3-4% on average.
Potential for Capital Growth:
Commercial properties are usually valued based on potential and actual rental returns. Relevant factors such as economic activity, interest rates and the commercial success of the area around the property are looked into.
With commercial properties, the lessee is responsible for paying maintenance and repairs, which cuts the costs of commercial investors even more.
Residential tenants aren’t always meticulous, and there are many “horror stories” about bad tenants. Commercial tenants on the other hand earn from the property, so they have an investment in keeping it well-maintained.
Growth of Income:
Because of their longer leasing terms, commercial properties can allow for the rent to increase every year, thereby increasing the return on investment as the lease continues.
Commercial properties typically have long lease terms of 3-10 years, while residential properties only have 12-month terms or less.
There are many more advantages to investing in commercial property, but the above should be enough reason to seriously consider researching more and investing in them. To learn more about commercial real estate or how to buy commercial properties in Australia, get in touch with National Brokers Network for FREE professional advice. With over 60 years of experience and dedicated service in real estate, you can trust our team to assist you successfully in all your real estate goals. Enquire with us today.